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Brexit and VAT: How can small businesses adapt?

VAT compliance often seems like an abstract matter. Something for the accounts team to work out as they crunch the numbers. For small businesses, however, sharp shifts in VAT requirements can have massive real life consequences. With Brexit now a reality, how can small and medium-sized businesses adapt to new VAT rules?

Small businesses: seek clarity on VAT charges 

Each day, numerous news reports emerge of private individuals and small businesses being caught unawares by additional import VAT charges. Reports also indicate that freight companies are adding additional fees to cover extra paperwork at the border. In addition, businesses are reeling at the cost (in time and money) of compliance. 

Small businesses obviously need clarity on the real costs of imported supplies in order to appropriately configure their pricing and services. 

The Brexit VAT challenge for exporters

As the reality of Brexit becomes clearer, the queues and bottlenecks at the border captured most of the headlines. However, in the long term, UK firms moving goods to Europe will likely need to focus more on structural changes to VAT compliance and customs requirements.  

While the UK-EU trade deal makes provision for tariff-free trade, various conditions need to be met. In addition, not all goods will be eligible for the tariff-free provision (subject to rule of origin requirements).

Perhaps more importantly, businesses need to ensure their VAT processes are up to date.  For example, all British businesses shipping goods to Europe for the purpose of onward sales need either to become established in the EU or appoint an indirect representative. 

Brexit therefore presents a particular VAT challenge for small and medium-sized businesses. Bloomberg notes that this poses a problem as “finding a business prepared to do this for a reasonable price can be difficult, and in some jurisdictions there simply is no market for the provision of this service and businesses have no option other than to become established, with all of the attendant tax issues.”

A scalable VAT solution 

Vatglobal is carefully monitoring all the real-world Brexit outcomes to ensure our clients are fully VAT compliant – and fully prepared for any future regulatory changes.

If you are doing business in Europe, get in touch with Vatglobal. We’ll provide total clarity on all your VAT obligations. 

Vatglobal’s technology-driven solution makes VAT compliance simple, efficient and more affordable. It’s a scalable solution that makes global VAT compliance simple for any business.

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